MEMORANDUM OF AGREEMENT entered into in the City and District of Montreal,
Province of Quebec, as of the 9th day of October, 2001.
BETWEEN: LMS MEDICAL SYSTEMS LTD., a duly incorporated
corporation, having its principal place of
business at 0000 xx Xxxxxxxxxxx Xxxxxxxxx Xxxx,
Xxxxx 000, in the City and District of
Montreal, Province of Xxxxxx, X0X 0X0, herein
acting and represented by Xxxxxx XxXxxxx, its
Chairman of the Board, duly authorized hereunto
as he so declares;
(hereinafter referred to as the "CORPORATION")
AND: XXXXX XXXX, residing and domiciled at 10760
Grande Allee, City of Montreal, Province xx
Xxxxxx, X0X 0X0;
(hereinafter referred to as the "EXECUTIVE")
WHEREAS the Corporation operates the Business (as such term is hereinafter
defined);
WHEREAS the Corporation wishes, subject to the terms herein set out, to engage
the Executive in the capacity of President and Chief Executive Officer;
WHEREAS the Executive is willing to accept such appointment, in accordance with
the terms herein set out;
NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:
1. CERTAIN DEFINITIONS
1.1 For the purposes hereof, unless there is something in the subject matter or
context inconsistent therewith, the following terms and expressions shall
have the meanings ascribed to them as follows:
a) "AFFILIATE" means CALM Medical Solutions, Inc. as well as such other
entities which may become Affiliates (as such term is defined in the
Canada Business Corporations Act) of the Corporation following the
execution of this Agreement provided that the Executive is advised of
same;
b) "AGREEMENT" means this Employment Agreement and the accompanying
Schedules and includes any and every deed or instrument which is
supplementary or ancillary hereto or an implementation hereof;
c) "BUSINESS" means the Corporation's business which essentially involves
the development and marketing of software and specialized monitoring
equipment which
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enables health professionals to obtain data in real time during the
delivery process. An essential component of the Business is the
Corporation's product, CALM(TM), which is a software mathematical
model which shows how a mother's labor is progressing compared to a
reference population of expectant mothers under similar conditions.
The Corporation furthermore intends to develop additional related
services by developing a fetal heart rate analysis pattern and by
creating a database accessible by Internet;
d) "CHANGE OF CONTROL" means either i) the Institutional Shareholders
selling all their class "A" Common Shares in the Corporation's share
capital to a third party(ies) or ii) the Corporation selling the
Business to a third party(ies) or (iii) the occurrence of the event
mentioned at paragraph 6.2.1 of the Stock Option Plan;
e) "FISCAL YEAR" means the Corporation's fiscal year which currently runs
from November 1st of one calendar year to October 31st of the
following calendar year;
f) "INSTITUTIONAL SHAREHOLDERS" has the meaning given thereto in the
Shareholders' Agreement;
g) "NON-VOTING COMMON SHARES" means the non-voting class "B" common
shares in the Corporation's share capital;
h) "SHAREHOLDERS' AGREEMENT" means that certain unanimous shareholders'
agreement of the Corporation dated January 18, 2001, as same may be
amended, supplemented or replaced; and
i) "STOCK OPTION PLAN" means the Corporation's current stock option plan
established for its eligible employees and board members in order to
provide them with an incentive to promote, to the best of their
abilities, the interests of the Corporation. A copy of the plan is
attached hereto as Schedule 1.1(i).
2. APPOINTMENT AND DURATION
2.1 The Corporation undertakes to engage the Executive in the capacity of
President and Chief Executive Officer effective as of November 1, 2001. For
greater certainty, however, the parties wish to confirm that
notwithstanding the foregoing, the terms and conditions of this Agreement
are effective as of October 9, 2001.
2.2 Subject to the terms of the probation period provided for in PARAGRAPH 2.3
and the terms of PARAGRAPH 2.7, this Agreement shall be for an
indeterminate period of time commencing as of October 9, 2001. The terms
and conditions of this Agreement will be reviewed and, if required, revised
by the parties within thirty (30) days of the end of each Fiscal Year
during the term hereof. In addition the parties may review and, if
required, revise the terms and conditions of this Agreement at the end of
the probation period provided for in PARAGRAPH 2.3.
2.3 The first ninety (90) calendar days of the Executive's employment,
beginning on October 9, 2001, shall be considered a probation period and
the Corporation has, subject to the
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terms of PARAGRAPH 6.1.1, full discretion during this period to notify the
Executive of its decision to terminate the employment.
2.4 The functions of the Executive, as President and Chief Executive Officer,
shall consist of managing the business of the Corporation as well as all
other tasks and responsibilities that may be reasonably attributed to her
by the board of directors of the Corporation from time to time including,
without limitation, those described in SCHEDULE 2.4 hereof.
2.5 The Executive shall carry out her functions at the head offices of the
Corporation currently in the City of Montreal.
2.6 It is confirmed that in her capacity as acting Chief Executive Officer, the
Executive is entitled, in accordance with the terms of the Shareholders'
Agreement, to be a director of the Corporation.
2.7 The Executive acknowledges that her engagement hereunder is conditional
upon obtaining the requisite approval of the Institutional Shareholders as
set out in Section 6.1.13 of the Shareholders' Agreement.
3. REMUNERATION
3.1 The Corporation shall provide to the Executive a remuneration package,
excluding the bonuses set out in PARAGRAPH 3.2, not exceeding a gross
amount of $180,000.00 per annum, of which the salary portion is payable in
bi-weekly installments, less such deductions as are required by applicable
law and regulations.
3.2 In addition to her remuneration package, the Executive is entitled to a
bonus, the whole subject to the following terms and conditions:
3.2.1 the bonus payable shall be equal to fifty percent (50%) of the
Executive's remuneration package referred to in PARAGRAPH 3.1 and
shall be conditional upon the fulfillment of the milestones
attributed to her by the board of directors of the Corporation such
as provided in PARAGRAPH 3.2.2; if less than all of the milestones
are fulfilled, the board of directors may grant to the Executive a
bonus which is less than 50% of the remuneration package;
3.2.2 within a sixty (60) day period following the start of each Fiscal
Year during the term hereof, the board of directors of the
Corporation together with the Executive will establish the
milestones to be attained by the Executive in order to be entitled
to her bonus. The milestones will allow the board of directors of
the Corporation to evaluate the performance of the Executive in
achieving the business plan of the Corporation. These milestones
will have to be approved by the Institutional Shareholders pursuant
to Section 6 of the Shareholders' Agreement. The Executive will then
be notified in writing of the milestones, no later than ninety (90)
days following the start of each Fiscal Year; and
3.2.3 starting with the audited financial statements for the Fiscal Year
ending on October 31, 2002, the bonus for that year and for each
subsequent year thereafter
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shall, subject to the terms of this PARAGRAPH 3.2, be paid in a lump
sum within ten (10) days of the receipt by the Corporation of its
audited financial statements for each applicable year, it being
understood that in the event the Executive does not remain employed
for the whole year with respect to which the bonus is payable, the
Executive is entitled to a prorated portion of the bonus otherwise
payable for such year based on the actual number of days the
Executive is employed by the Corporation.
3.3 It is further understood that the Executive is eligible to participate in
the Stock Option Plan and the Corporation hereby grants her the following
options to subscribe to Non-Voting Common Shares pursuant to the Stock
Option Plan, the whole in accordance with the following terms and
conditions:
3.3.1 upon the execution of this Agreement by both parties, options to
subscribe to 10,000 Non-Voting Common Shares are granted and will
immediately vest;
3.3.2 for the Fiscal Year ending on October 31, 2002, options to subscribe
to an additional 10,000 Non-Voting Common Shares will be granted
within thirty (30) days thereafter and will immediately vest;
3.3.3 for each of the Fiscal Years ending on October 31, 2003, 2004 and
2005, options to subscribe to an additional 5,000 Non-Voting Common
Shares will be granted within thirty (30) days of the end of each
such Fiscal Year, and will immediately vest;
3.3.4 in the event the milestones referred to in PARAGRAPH 3.2.2 are
fulfilled, additional options representing a further 5,000
Non-Voting Common Shares for each of the Fiscal Years ending on
October 31, 2003, 2004 and 2005 shall be granted within thirty (30)
days of the end of each such Fiscal Year, and immediately vest;
3.3.5 for greater certainty, it is acknowledged that the granting of the
options referred to in PARAGRAPHS 3.3.2, 3.3.3 and 3.3.4 is further
conditional upon the Executive remaining employed with the
Corporation until October 31st of the year for which the grant is
made (and in the event the Executive ceases to be an employee of the
Corporation prior to such date, the right to exercise the applicable
set of options as well as all further options shall lapse and be of
no effect) provided, however, that in the event the Executive is
terminated as a direct consequence of a Change of Control, the
parties agree that the aggregate of the options referred to in
PARAGRAPHS 3.3.2, 3.3.3 and 3.3.4 shall immediately vest with the
Executive;
3.3.6 the exercise price of the options shall be $12.50 per share, payable
cash as at the date each option is exercised;
3.3.7 it is understood that the grant of the above-mentioned stock options
will be approved by the Board of Directors of the Corporation and
that a Notice of Participation pursuant to the Stock Option Plan
will be issued accordingly, reflecting the terms and conditions set
out in PARAGRAPH 3.3 and following; and
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3.3.8 all other terms and conditions applicable to the options herein
granted are as set out in the Stock Option Plan.
4. EXPENSES
4.1 The Corporation shall on a monthly basis reimburse the Executive the
expenses reasonably incurred by her in the proper performance of her duties
subject to the production of receipts or vouchers.
5. VACATION
5.1 In addition to Quebec statutory general holidays, the Executive is entitled
to four (4) weeks paid vacation per year, to be taken beginning in the
first year of employment. The Executive shall have the right to carry
forward any unused part of her vacation entitlement for one (1) subsequent
reference year.
6. TERMINATION
6.1 Subject to the terms of PARAGRAPH 6.3, in the case where the Corporation
terminates the employment of the Executive, it must provide the Executive
with an indemnity in lieu of notice based on the Executive's remuneration
package and bonus for the previous year, prorated as required, payable in
one lump sum upon the termination of her employment as follows:
6.1.1 three (3) months if terminated during the probation period;
6.1.2 twelve (12) months if terminated within the three hundred and
sixty-five (365) day period immediately following the end of the
probation period; and
6.1.3 eighteen (18) months if terminated thereafter.
6.2 Notwithstanding the foregoing, the Executive shall be entitled to a
twenty-four (24) month indemnity in lieu of notice based on the Executive's
remuneration package and bonus for the previous year, prorated as required
in the event her employment with the Corporation is terminated as a direct
consequence of a Change of Control or in the event that she decides, within
sixty (60) days of the occurrence of the Change of Control, to terminate
her employment with the Corporation as a direct consequence of a Change of
Control.
6.3 Notwithstanding anything herein contained to the contrary, the Corporation
shall be entitled to terminate this Agreement without notice, or indemnity
in lieu of notice, "for cause".
6.4 In case of termination for any of the above reasons, the Executive shall be
entitled to receive any and all outstanding amounts owing as part of her
remuneration package referred to in PARAGRAPH 3.1 or bonus at the date of
termination or resignation.
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7. DUTIES
7.1 The Executive shall devote the whole of her time, attention and ability
during normal working hours to the business of the Corporation. The
Executive shall well and faithfully serve the Corporation during the
continuance of her engagement hereunder and use her best efforts to promote
the interest and welfare thereof. The Executive shall specifically avoid
being engaged in any outside business activities which may either
constitute or have the appearance of a conflict of interest with the
Business or the business of any Affiliate.
8. INTELLECTUAL PROPERTY
8.1 The Executive hereby acknowledges that the Corporation or applicable
Affiliate, as the case may be, is the sole and exclusive beneficial owner
of all rights, titles and interests in the intellectual property, trade
secrets, patents, trade marks, trade or brand names, business names,
copyrights and all technology of the Corporation or applicable Affiliate
including, without limiting the generality of the foregoing, any
information, documentation and data, developed, created or used by or with
the help of the Executive in connection with the Business or the business
of the applicable Affiliate and the Executive shall assist the Corporation
and applicable Affiliate their attorneys and agents, (upon demand and at
the Corporation's expense), in the preparation of pursuit anywhere in the
world of any application for registration of patent or any other rights
resulting from such intellectual property.
8.2 The Executive shall, immediately and completely, during the term of this
Agreement and thereafter, reveal and surrender to the Corporation and
applicable Affiliate, free of any charge but at no cost to the Executive,
any and all rights, titles and interests in said intellectual property.
9. CONFIDENTIALITY
9.1 The Executive acknowledges that the Corporation or applicable Affiliate, as
the case may be, is the owner of all of its intellectual property, trade
secrets and confidential information, which includes in the Corporation's
case, without limitation, the Corporation's inventions, its technology, its
processes, its methods, its developments, its marketing and financial
information, its business practices, the names of its existing customers,
the names of prospective customers with which it is negotiating, its
pricing practices, the prices of its existing contracts, the prices quoted
by it for proposed contracts and the content of its outstanding tenders,
and the Executive agrees and covenants that she shall not, during the term
of her employment with the Corporation and at any time thereafter, use for
her own purposes or divulge, or allow access to, any of such trade secrets
and confidential information to any person, either directly or indirectly,
except for the information that is available in the public domain or that
has otherwise been made legitimately public by the Corporation or the
applicable Affiliate.
9.2 This provision shall survive the termination of this Agreement for any
reason whatsoever.
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10. NON-COMPETITION
10.1 For good and valuable consideration, the receipt and sufficiency of which
are acknowledged, the Executive agrees that at all times during the term of
her employment with the Corporation and for twelve (12) months following
the date of termination of her employment if such termination occurs,
within the first three hundred and sixty-five (365) days following the end
of her probation period, or for a term of twenty-four (24) months if such
termination occurs after the first three hundred and sixty-five (365) days
following the end of her probation period, she shall not engage as
employer, employee, principal, agent, shareholder, director, officer,
partner, consultant, lender or otherwise, directly or indirectly, in a
business in competition with the Business or the business of any Affiliate
in any markets throughout the world where the Corporation or any Affiliate
has had clients in the year preceding her ceasing to be employed by the
Corporation.
10.2 The provisions of PARAGRAPH 10.1 shall survive the termination of this
Agreement, except if the Executive is terminated without cause.
11. NON-SOLICITATION
11.1 The Executive agrees that she shall not, for the same period as mentioned
in PARAGRAPH 10.1, hire or recruit any employee of the Corporation or any
of its Affiliates or encourage any such employee to leave the Corporation
or any Affiliate.
11.2 The provisions of PARAGRAPH 11.1 shall survive the termination except if
the Executive is terminated without cause.
12. GENERAL
12.1 PAYMENTS IN ACCORDANCE WITH APPLICABLE LAW
All payments which the Corporation is required to make pursuant to the
terms hereof shall be made in accordance with applicable law and
regulations and under no circumstance shall the Corporation be responsible
for any personal income tax of the Executive.
12.2 PREAMBLE AND SCHEDULES
The preamble and Schedules hereto form an integral part of this Agreement.
12.3 OTHER TERMS
The provisions of the Corporation's standard terms and conditions of
employment (as amended from time to time) shall be included in the terms of
the Executive's employment, except to the extent that they are inconsistent
with this Agreement, or that they substantially modify the conditions of
employment of the Executive.
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12.4 PRIOR AGREEMENTS
This Agreement sets out the entire agreement and understanding of the
parties with respect to the subject matter hereof and is in substitution
for any previous agreements, promises, proposals, understandings and
negotiations between the parties hereto which are inconsistent with the
terms of this Agreement.
12.5 GOVERNING LAW AND INTERPRETATION
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Province of Quebec. This
Agreement shall be interpreted with all necessary changes in gender and in
number as the context may require and enure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto.
12.6 SEVERABILITY OF THE TERMS OF THE CONTRACT
Each paragraph of this Agreement shall be and remain separate and
independent of and severable from all and any other paragraphs herein
except as otherwise indicated by the content of the Agreement. A decision
or declaration that one or more paragraph(s) are null and void shall have
no effect on the remaining paragraphs of this Agreement.
12.7 LANGUAGE OF AGREEMENT
The parties hereby confirm that they have required that this Agreement and
all notices in connection therewith be drafted in the English language. Les
parties confirment qu'elles ont exigees que cette convention et tous avis
s'y rattachant soient rediges en anglais.
AND THE PARTIES HAVE SIGNED:
LMS MEDICAL SYSTEMS LTD.
Per: "Xxxxxx XxXxxxx"
------------------------------
Xxxxxx XxXxxxx
Chairman of the Board
"Xxxxx Xxxx"
---------------------------- ------------------------------
WITNESS XXXXX XXXX
SCHEDULE 1.1(I)
STOCK OPTION PLAN OF
LMS MEDICAL SYSTEMS LTD.
1. PURPOSE
1.1 The stock option plan (the "PLAN") is established for eligible employees
and board members of LMS MEDICAL SYSTEMS LTD. (the "CORPORATION") for the
purpose of providing them with an incentive to promote, to the best of
their abilities, the interests of the Corporation through the granting of
options to subscribe non voting common shares of the Corporation (the "NON
VOTING SHARES"). The Plan is designed to allow the eligible persons meeting
predetermined milestones to participate in the growth and success of the
Corporation in the period prior to either: a) listing the shares of the
Corporation on a recognized North American stock exchange, or b) the
acceptance by the shareholders of the Corporation holding more than 50% of
the common shares of an offer to acquire their shares.
2. MAXIMUM NUMBER OF SHARES SUBJECT TO OPTIONS
2.1 The maximum number of Non Voting Shares which may be subject to options
conferred pursuant to the Plan shall not exceed 10% of the outstanding
common shares and Non Voting Shares of the Corporation at the time any
option is granted (the "POOL OF SHARES OFFERED").
2.2 A number equal to 25% of the Pool of Shares Offered shall be made available
for issuance under the Plan to eligible persons on October 25, 1997, and
each year thereafter (the "ANNUAL OPTIONS OFFERED"). Any of the Annual
Options Offered not granted to eligible persons in a given year shall be
added to the Annual Options Offered of the following year of the Plan.
3. ELIGIBILITY
3.1 All the eligible persons of the Corporation may participate in the Plan
after six months of employment or appointment as the case may be.
3.2 Each eligible person shall received the Notice of Participation referred to
in paragraph 4.1, and the options he is entitled to will be granted to him
on an annual basis, shortly after the first meeting of the board of
directors of the Corporation (the "BOARD") following each fiscal year end
of the Corporation.
4. GRANT OF OPTIONS
4.1 The Board may determine from time to time, upon management's
recommendation, the eligible persons to whom options may be granted
pursuant to the Plan, the milestones to be attained, the time frame for the
accomplishment of such milestones, the number of
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Non Voting Shares subject to such options and their subscription price. The
Corporation shall then inform in writing each eligible person an the
specific conditions of his participation in the Plan (the "NOTICE OF
PARTICIPATION").
4.2 Once a year as provided for in paragraph 3.2 and upon fulfilment of his
obligations established in the Notice of Participation, an eligible person
shall be granted the options he is entitled to pursuant to the Notice of
Participation. Each option shall be evidenced by a stock option agreement
substantially in the form of the agreement annexed hereto as SCHEDULE 4.2
5. PRICE
5.1 The options granted pursuant to the Plan may be exercised by their holders
in consideration of a subscription price per Non Voting Share determined by
the Board periodically and set out in each Notice of Participation and its
corresponding stock option agreement executed between the eligible person
and the Corporation.
6. TERMS OF THE OPTIONS
6.1 Except provided otherwise in this Plan, any option granted under the Plan
may be exercised at any time before the fifth anniversary of its issuance.
6.2 Notwithstanding PARAGRAPH 6.1, all the options granted under the Plan will
become exercisable, including all the options reserved for each eligible
person pursuant to a Notice of Participation and not yet granted, will
automatically become available for subscription under the Plan at the
occurrence of one of the following events:
6.2.1 the shareholders of the Corporation holding more than 50% of the
voting common shares have accepted an offer of a third party to
acquire all of their shares; or
6.2.2 the Corporation proceeds to the listing of its shares on a
recognized North American stock exchange.
6.3 Each eligible person shall receive at least 10 days before the occurrence
of the events mentioned in PARAGRAPH 6.2 a notice from the Corporation with
full particulars of the proposed transaction, in order to allow such person
to exercise his rights accordingly. The eligible person shall notify the
Corporation in writing of his intent to exercise his options or rights
hereunder. Any option or right to subscribe Non Voting Shares not exercised
within 10 days of reception of such notice shall be extinguished without
further notice or delay.
7. DEATH
7.1 Notwithstanding PARAGRAPH 6.1, upon death of an eligible person, his or her
estate will be entitled to exercise the options then granted to the
deceased, within one year after the date of the death. The deceased and his
or her estate shall have no right whatsoever in the options reserved to the
deceased pursuant to a Notice of Participation and not yet granted at the
time of the death.
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7.2 Should the estate of the deceased receive from the Corporation the notice
provided for in PARAGRAPH 6.3 the exercise period for options granted to
the deceased shall be reduced accordingly.
8. TERMINATION OF EMPLOYMENT
8.1 Notwithstanding PARAGRAPH 6.1, if the employment or the appointment of an
eligible person, as the case may be, is terminated far cause, no option
granted under the Plan and held by such eligible person may be exercised,
and such eligible person shall have no right to any Non Voting Shares
thereunder following the date of the notice of such termination.
8.2 Notwithstanding PARAGRAPH 6.1, if the employment or the appointment of an
eligible person, as the case may be, is terminated otherwise than for
cause, such eligible person shall indicate by written notice to the
Corporation within one month of such termination whether or not he intends
to exercise his options, failing which he shall be irrevocably presumed to
have relinquished all his rights under the Plan. In addition, the eligible
person will be entitled to exercise the options granted to him within three
months of the termination of his employment or appointment. Any option not
exercised within such period shall be extinguished without further notice
or delay.
8.3 Upon termination of employment or appointment as provided in PARAGRAPH 8.2,
the eligible person shall have no right whatsoever in the options reserved
to him pursuant to a Notice of Participation and not yet granted at the
time of termination.
8.4 Should the eligible person receive from the Corporation the notice
mentioned in PARAGRAPH 6.3, the exercised period provided in PARAGRAPH 6.3
should take precedent over the one applicable in PARAGRAPH 8.2.
9. EXERCISE OF OPTIONS
9.1 The options granted pursuant to the Plan may be exercised, in full or in
part, by written notice to the secretary of the Corporation in the form and
substance of the exercise notice set forth in SCHEDULE 9.1 hereto, such
notice to be accompanied by a certified cheque made payable to the
Corporation in the amount of the full price of the Non Voting Shares so
subscribed for. The Corporation shall cause a certificate for the number of
shares specified in the notice to be issued and registered in the name of
the eligible person and delivered to him within reasonable time following
the reception of the notice and of the cheque accompanying it.
10. NON-ASSIGNABILITY OF OPTIONS
10.1 The options granted under the Plan are granted "intuitu personae" and may
not be sold, be transferred or be assigned as security by their holders
except with the prior approval of the Board; any such sale, transfer or
assignment of the options granted pursuant to the Plan without approval of
the Board shall consequently render null and void such options.
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11. AMENDMENT TO THE SHARES
11.1 In the case of the subdivision, redivision, change, exchange, a combination
or a reclassification of the Non Voting Shares or the common shares of the
Corporation, or any other analogous amendment to the structure of the share
capital of the Corporation during the term of this Plan, the Corporation
undertakes to deliver to the eligible person shares adjusted, upward or
downward, as the case may be, so as to take into account any of the
foregoing events, and not the number of Non Voting Shares represented by
the option, as if the option had been exercised immediately prior to the
subdivision, redivision, change, exchange, combination or reclassification
or any other analogous amendment, as the case may be, without the eligible
person having to make any additional payment or give other consideration.
11.2 Should the shareholders of the Corporation holding more than 50% of the
common shares have accepted an offer of a third party to acquire all of
their shares, then the Corporation shall exchange all of the Non Voting
Shares for common shares of the Corporation on a ratio of 1 for 1.
12. POWERS OF THE BOARD
12.1 The Plan is under the management and administration of the Board. The Board
may from time to time, by resolution, amend or terminate and annul this
Plan and adopt any measure that is felt necessary or desirable for the good
administration of this Plan.
12.2 The Board may interpret the Plan and make any decision in its respect as to
any question which may arise in respect of the Plan and the decisions of
the Board shall be final and binding on all parties affected thereby.
12.3 The Board may, notwithstanding the establishment of the Plan, reserve
additional Non Voting Shares of the share capital of the Corporation in
order to confer to any person rights of conversion, of subscription or of
purchase of shares, or options, being understood that the Plan is not
exclusive.
12.4 A copy of all the documents related to the Plan such as resolutions of the
Board, Notice of Participation, stock option agreement and exercise notice
shall be forwarded to the compensation committee of the Corporation.
13. COMING INTO EFFECT
13.1 This plan comes into effect on October 25, 1997.
SCHEDULE 2.4
LMS MEDICAL SYSTEMS LTD.
(THE "CORPORATION")
XXXXX XXXX
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Title: President and CEO
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Reports to: Board of Directors
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Interfaces with: Customers, Suppliers, Distributors,
Representative Organizations, Competitors,
Sources of Financing, Government Agencies,
Regulatory Authorities, Professional
Societies
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Key Responsibilities: Develop strategic and operating plans for
future growth and profitability of the
company
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Ensure that the Corporation is appropriately
financed, equipped, and staffed
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Lead and manage the human capital - team
building, visioning, communicating
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Create and enhance the internal planning and
control business systems - set standards
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Oversee the creation and delivery of all
financial and managerial reporting required
by the board
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Hands-on management to ensure that both the
technical and sales efforts are on schedule
and on budget; take corrective action where
necessary
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Locate potential strategic sales and
technical alliance partners - negotiate as
required to carry out the corporate growth
objectives
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Responsibility for overseeing all human and
financial resources, marketing and sales,
research and development, and operations
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MEMORANDUM OF AGREEMENT entered into in the City and District of Montreal,
Province of Quebec, this "9th " day of "September" 1996.
BETWEEN: LMS LABOR MANAGEMENT SYSTEMS LIMITED, a duly
incorporated corporation, having its principal
office at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000 in
the City and District of Montreal, Province of
Quebec
(Hereinafter referred to as the "Company")
AND: DR. XXXXX XXXXXXXX, physician, of the City of
Verdun (Nuns' Island), Province of Quebec
(Hereinafter referred to as "Xx. Xxxxxxxx")
WHEREAS the holding body corporate (as such term is defined in the Canada
Business Corporations Act) of the Company is Xxxxxxxx R & D Inc.;
WHEREAS the Company is negotiating financing for start-up operations and is
anticipated to achieve commitment and funding during the summer of 1996
("Financing");
WHEREAS the Company was incorporated in 1993 and Xx. Xxxxxxxx has served, since
the date of incorporation, and is currently holding the position of President
and Vice-President of Medical Technology;
WHEREAS the Company desires to engage a new President and Chief Executive
Officer in the event of a successful Financing and to commit to writing the
terms and conditions of Xx. Xxxxxxxx'x continued employment as Vice-President of
Medical Technology;
WHEREAS the present Agreement is conditional upon receipt of funds by the
Company from said Financing:
NOW, THEREFORE THE PARTIES AGREE AS FOLLOWS:
1. PREAMBLE
1.1 The preamble forms an integral part of the present agreement.
2. APPOINTMENT AND DURATION
2.1 The Company undertakes to engage Xx. Xxxxxxxx in the capacity of
Vice-President of Medical Technology for an indeterminate period of time
commencing on the date of receipt of funds from Financing or on the date of
the beginning of Xx. Xxxxxxxx'x leave of absence from XxXxxx University,
which is October 1st, 1996.
2.2 Xx. Xxxxxxxx shall carry out her functions at the head offices of the
Company currently in the City of Montreal.
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2.3 Xx. Xxxxxxxx shall also be entitled to be a member of the Board of
Directors of the Company, for as long as she may desire.
2.4 Xx. Xxxxxxxx shall continue to be responsible for the medical aspects of
the products, to ensure that same will remain uncompromised and of the
highest quality. As such, she will continue to have direct control over all
medical research and to participate in product development.
3. REMUNERATION
3.1 The Company shall pay to Xx. Xxxxxxxx a xxxxx base salary of $115,000 per
annum, payable in bi-weekly instalments.
3.2 Xx. Xxxxxxxx'x basic salary shall be reviewed by the Company at least once
in each financial year. Should the percentage of her time committed to the
Company change substantially, her gross base salary will be adjusted
accordingly. Pursuant to paragraph 8.1, Xx. Xxxxxxxx will continue to
derive some remuneration from outside the Company.
3.3 As of the beginning of the second year of the present Agreement, in
addition to the gross base salary, the Company shall pay to Xx. Xxxxxxxx a
minimum of forty percent (40%) of her gross base salary in the event the
Company meets the reasonable established targets set at the end of the
previous year.
3.4 Payment to Xx. Xxxxxxxx of said bonus commences at the end of the second
year of the present Agreement and shall be exigible if she attains ninety
percent (90%) of target and increase without limitation if said targets are
exceeded.
3.5 It is acknowledged that after the Financing, Xx. Xxxxxxxx will own ten and
twenty-seven one hundredths of one percent (10.27%) of the issued and
outstanding shares in the capital stock of the Company on a fully-diluted
basis.
4. BENEFITS
4.1 In addition to the above, the Company shall pay to Xx. Xxxxxxxx the
following benefits, in an amount equal to the difference between the
current value of such benefits paid to her by XxXxxx University (as same
may be adjusted from time to time in subsequent years) , and the portion
thereof which XxXxxx University shall continue to pay to Xx. Xxxxxxxx or
for her benefit:
(a) medical expenses, payable quarterly in lieu of a medical plan to a
maximum of $2,000 per year; and
(b) pension contributions to Xx. Xxxxxxxx'x RRSP, payable quarterly in
lieu of a pension plan to a maximum of $3,500 per year.
5. EXPENSES
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5.1 The Company shall reimburse Xx. Xxxxxxxx monthly for all travelling, hotel,
entertainment and other expenses reasonably incurred by her in the proper
performance of her duties, subject to the production of receipts or
vouchers.
6. VACATION
6.1 In addition to Quebec statutory general holidays, Xx. Xxxxxxxx is entitled
to four (4) weeks paid vacation per year. Xx. Xxxxxxxx shall have the right
to carry forward any unused part of her vacation entitlement for one (1)
subsequent reference year. However, if at the end of the subsequent
reference year there remains an unused part of her vacation entitlement,
Xx. Xxxxxxxx shall be compensated for said unused part. It is the intention
of the parties that Xx. Xxxxxxxx'x vacation entitlement shall be similar to
that established for other senior management.
7. TERMINATION
7.1 In the case where the Company terminates the appointment of Xx. Xxxxxxxx,
it must provide Xx. Xxxxxxxx with one (1) year's notice or an equivalent
indemnity in lieu of notice payable in one (1) lump sum upon the
termination of her appointment. In the case where Xx. Xxxxxxxx terminates
the appointment, she must provide two (2) months' notice to the Company.
7.2 However, the Company shall be entitled to terminate the present contract of
employment without delay "for just and sufficient cause".
7.3 In case of termination for any of the above reasons, Xx. Xxxxxxxx shall be
entitled to receive any and all outstanding or accruing salary or
remuneration as of the date of termination by either party including any
and all commissions, bonus or benefits to which she is entitled and this,
on a pro rata basis to the date of termination, as required.
8. DUTIES AS VICE-PRESIDENT OF MEDICAL TECHNOLOGY
8.1 Xx. Xxxxxxxx shall exercise due diligence in carrying out her duties as
Vice-President of Medical Technology of the Company to work toward the
success of the Company and to implement her vision of a superior system for
labour monitoring. It is understood that this undertaking will occupy most
of her working time. It is agreed, however, that she shall continue to
devote about eight (8) to ten (10) hours per week to the department of
obstetrics at McGill teaching hospitals and XxXxxx University to maintain
her professional status as a professor of medicine and practising
gynaecologist for the mutual benefit of both the Company and Xx. Xxxxxxxx.
8.2 Xx. Xxxxxxxx shall apply due diligence in promoting the best interests of
the Company.
9. CONFIDENTIALITY
9.1 Xx. Xxxxxxxx shall maintain the confidentiality of the intellectual
property, computer programs, research, trade secrets, insider information,
financial and business information and all matters relating to the
operation and status of the Company and shall not in any
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manner divulge any such information to any third party, unless required
within the normal performance of the functions of this position, by
contract or by law.
9.2 This provision shall survive the termination of this Agreement.
10. NON-COMPETITION
10.1 During the course of her employment, nor for the period of one (1) year
following termination of the present Agreement by Xx. Xxxxxxxx or by the
Company for any cause, Xx. Xxxxxxxx shall not engage, in any manner or
capacity whatsoever, directly or indirectly, whether as an employee,
consultant, advisor, project director, shareholder, independent contractor
or otherwise to compete with the then current product base of the Company.
11. LANGUAGE OF AGREEMENT
11.1 The parties hereby request that this Agreement and all notices in
connection therewith be drafted in the English language. Les parties
exigent par la presente que cette convention et tout avis s'y rattachant
soient rediges en anglais.
AND THE PARTIES HAVE SIGNED:
"Xxxxx Xxxxxxxx"
----------------------------
DR. XXXXX XXXXXXXX
LMS LABOR MANAGEMENT SYSTEMS
LIMITED
per: "Xxxxxxx X. Xxxx"
----------------------
Xxxxxxx X. Xxxx
XXXXXXXX R & D INC.
per: "Xxxxx Xxxxxxx"
----------------------
Xxxxx Xxxxxxx
MEMORANDUM OF AGREEMENT entered into in the City and District of Montreal,
Province of Quebec on the 1st day of March, 2002.
BETWEEN: LMS MEDICAL SYSTEMS LIMITED, a duly
incorporated corporation, having its
principal office at 5252 de Maisonneuve
Boulevard West, Suite 314, in the City and
District of Montreal, Province of Quebec H4A
3S5, herein acting and represented by Xx.
Xxxxx Xxxx, its President and Chief Executive
Officer, duly authorized hereunto as she so
declared
CALM MEDICAL SOLUTIONS, 0000 XXXXXXX XXXXX,
XXXXXXXX, XXXXXXXX, X.X.X. , a duly
incorporated corporation, having its
principal office at 5252 de Maisonneuve
Boulevard West, Suite 314, in the City and
District of Montreal, Province of Quebec H4A
3S5, herein acting and represented by Xx.
Xxxxx Xxxx, its President and Chief Executive
Officer, duly authorized hereunto as she so
declared
(Hereinafter referred to as the "Company")
AND: XX. XXXXXXX XXXXXXX XXXXX, residing and
domiciled at 000, Xxxx Xxxxxx Xxxxxx Xxxxx,
Xxxx, Xxxxx Xxxxxxxx, 00000, Xxxxxx Xxxxxx.
(Hereinafter referred to as the "Employee")
WHEREAS the Company has retained the services of the Employee as Vice-President,
Development, and the Employee wishes to enter the employment of the Company in
the same capacity;
WHEREAS the Company and the Employee desire to enter into a formal employment
agreement to set out in writing their respective rights and obligations;
NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:
1. PREAMBLE
1.1 The preamble to this Agreement shall constitute an integral part
hereof.
2. EMPLOYMENT AND DUTY
2.1 The Company undertakes to engage the Employee in the capacity of
Vice-President of Development.
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2.2 In his capacity as Vice-President of Development, the Employee shall
be responsible for the development of the Company's software, subject
to such directives as may be communicated to the Employee from time to
time by the President.
2.3 The Employee agrees to devote during working hours his full-time,
attention, skill and effort to the enhancement and increase of the
Company business. The Employee further covenants that he will
faithfully perform those duties which are assigned to him to the best
of his abilities and that he will not engage in any other active
business, during normal business hours, subject only to the rights to
engage in activities directly relating to passive investments by the
Employee which do not interfere with the Employee's duties and
responsibilities pursuant to this Agreement and which, in any event,
do not occupy the Employee during normal business hours. It is further
understood that the Employee shall not, during the term of this
agreement, receive, directly or indirectly, any gain, profit, or other
pecuniary advantage arising from or relating to any transaction
entered into between the Company or its affiliates and any third
party, or arising from or relating to the business activities or the
nature of the business activities engaged in by the Company or its
affiliates.
2.4 The Employee shall carry out his functions at the head offices of the
Company currently in the City of Montreal and from his home at least
one (1) week per month.
3. REMUNERATION
3.1 During the term of the Agreement, the Employee shall receive a yearly
basic salary of $135,000 U.S. per annum, payable in bi-weekly
instalments.
3.2 The Company shall pay to the Employee an additional $15,000 U.S. for
the period of March 1, 2002 to February 28, 2003.
3.3 For the period of March 1, 2002 to August 31, 2002, the Company will
pay to the Employee an allowance of a maximum of $35,000 U.S. for
lodging, travelling and related expenses, in accordance with the
Company's policy in this respect, provided that such expenses are
fully supported by receipts or other appropriate documentation.
3.4 The Employee is entitled to receive a bonus of up to 30% of his yearly
basic salary, in accordance with the bonus plan of the Company.
4. STOCK OPTION
4.1 Subject to the approval of the Board of Directors of the Company, and
any other required approvals, the Employee will receive, upon
signature of the present,
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5,000 Stock Options under the terms and conditions of the Employees'
Stock Option Plan ("ESOP") at an exercise price of $12.50 CDN per
share.
4.2 The Employee will also have the possibility to have granted to him, on
an annual basis, of 3% of his yearly basic salary, in the ESOP. It is
understood that the grant of such options (including the exercise
price thereof) to the Employee shall be at the discretion of the Board
of Directors of the Company to be given at the beginning of each
fiscal year.
5. VACATION AND BENEFITS
5.1 The Employee is entitled to four (4) weeks paid vacation per year. The
Employee shall have the right to carry forward any unused part of his
vacation entitlement for one (1) subsequent reference year.
5.2 The Employee will not take more than two (2) consecutive weeks of
vacation at a time.
5.3 The Employee shall be included in the Company's benefits plan at the
Company's expense.
6. TERMS OF EMPLOYMENT
6.1 This agreement is for an undeterminate term and shall be deemed to
have commenced on March 1, 2002.
7. TERMINATION
7.1 Notwithstanding paragraph 6.1, the parties understand and agree that
the present Agreement may be terminated, in the following manner and
in the following circumstances:
7.1.1 The Company may terminate the employment of the Employee during
the first year of the Agreement by giving the Employee a
severance payment equivalent to twice the number of months
worked up to a maximum of 75% of the yearly basic salary set
forth in section 3.1. Should there be a termination during the
second or third year, the Employee will be entitled to an
indemnity equivalent to 75% of the yearly basic salary set
forth in section 3.1.
7.1.2 If the Employee terminates the present agreement within
twenty-four (24) months after March 1, 2002 for the reason that
the development department is outsourced and that no equivalent
position can be offered to the Employee, the Employee will be
entitled to receive 75% of his basic salary set forth in
section 3.1 until he finds employment either with a new
employer or as a contractual employee. It is understood that
the total
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amount paid to the Employee will not exceed 75% of the yearly
basic salary less any proceeds obtained from the sale of shares
received from the bonus plan and any profit realized from the
exercise of options resulting from the termination.
7.1.3 In the case of a change of control of the Company (other than
by initial public offering), which means the acquisition
directly or indirectly of shares, giving the acquirer the right
to name more than 50% of the directors of the employer the
contract will remain in force unless the Employee resigns
within a three (3) month period from the change of control. If
the Employee resigns, he will be entitled to an indemnity
representing 75% of his yearly basic salary for one year, less
any proceeds resulting from the sale of shares received from
the bonus plan and any profit realized on the exercise of
option in accordance with the terms of the ESOP and bonus plan.
7.1.4 If two (2) of the executives holding the position of C.E.O.,
Vice-President Marketing, Vice-President Research,
Vice-President Operations leave the Company before March 1,
2004 and the Company presents a business plan which differs
substantially from the original plan with regards to the
products to be developed by the Company or the delay of
development of such products or the targeted market, the
Employee may after three (3) months following the resignation
of the second executive, resign from his position and be
entitled to an indemnity representing 75% of his yearly basic
salary, less any proceeds resulting from the sale of shares
received from the bonus plan and any profit realized on the
exercise of ESOP in accordance with the terms of the options
and bonus plan.
7.1.5 In the event that there is a disagreement or dispute between
the parties in establishing that the business plan referred to
under paragraph 7.1.4 differs substantially from the original
plan with regards to the products to be developed by the
Company or the delay of development of such products or the
targeted markets, such matter must be submitted for arbitration
in accordance with the applicable provisions of the Code of
Civil Procedure of Quebec, except to the extent as modified by
the following provisions:
7.1.5.1 The matter shall be submitted to arbitration before
Xxx. Xxxxx Xxxx. If this person is not available, the
parties will agree on the name of another single
arbitrator;
7.1.5.2 The party requesting the arbitration must send to the
other party an arbitration notice which shall include
the confirmation from the arbitrator and the
arbitration date. The arbitration must take place
within thirty (30) calendar days of the date the
arbitration was requested. The arbitration hearing
shall be held in Montreal, Province of Quebec.
-5-
7.1.5.3 The arbitrator shall have the power to establish its
own procedures and must render his decision in writing
within thirty (30) calendar days of the hearing.
7.1.5.4 The allocation of the arbitration fees shall be as
determined by the arbitrator and will be fully paid by
the Company.
7.1.5.5 The decision of the arbitrator shall be final and not
subject to appeal and shall be binding on the parties.
7.1.6 The Company may terminate for just cause the employment of the
Employee, without any notice or any payment, as specified in
section 7.1.1. Just cause shall include, but not be limited to,
dishonesty, inadequate performance of duties, material
violation of documented Company policies or procedures, failure
to act in accordance with the lawful direction of the Company.
7.1.7 The Company may terminate the employment of the Employee
without having to pay any severance payment if the employee is
unable to perform his duties in Canada.
8. DUTIES
8.1 The Employee shall devote the whole of his time, attention and ability
during normal working hours to the business of the Company. The
Employee shall well and faithfully serve the Company during the
continuance of his engagement hereunder and use his best efforts to
promote the interest and welfare thereof. The Employee shall
specifically avoid being engaged in any outside business activities
that may either constitute or have the appearance of a conflict of
interest with the business carried on by the Company.
9. INTELLECTUAL PROPERTY
9.1 The Employee hereby acknowledges that the Company is the sole and
exclusive beneficial owner of all rights, titles and interests in the
intellectual property, trade secrets, patents, trade marks, trade or
brand names, business names, copyrights and all its developed
technology including, without limiting the generality of the
foregoing, any information, documentation and data, developed, created
or used by or with the help of the Employee in connection with the
business of the Company and the Employee shall assist the Company, its
attorneys and agents, upon demand, in the preparation of pursuit
anywhere in the world of any application for registration of patent or
any other rights resulting from such intellectual property.
-6-
9.2 The Employee shall, immediately and completely, during the term of
this agreement and thereafter, reveal and surrender to the Company,
free of any charge, any and all rights, titles and interests in said
intellectual property.
10. CONFIDENTIALITY
10.1 The Employee acknowledges that the Company is the owner of all of its
intellectual property, trade secrets and confidential information,
which intellectual property, trade secrets and confidential
information include, without limitation, the Company's inventions, its
developed technology, its developments, its marketing and financial
information, its business practices, the names of prospective
customers with which it is negotiating, its pricing practices, the
prices of its existing contracts, the prices quoted by it for proposed
contracts and the content of its outstanding tenders, and the Employee
agrees and covenants that he shall not, during the term of his
employment with the Company and following the date of his ceasing to
be employed by the Company, use for his own purposes or divulge, or
allow access to, any of such trade secrets and confidential
information to any person, either directly or indirectly, except for
the information that is available in the public domain or that has
otherwise been made legitimately public by the Company.
10.2 This provision shall survive the termination of this Agreement.
10.3 The Agreement entitled LMS Medical Systems Limited Non-Disclosure
Agreement signed by the Employee July 1, 2001, will continue to be in
force for the duration of the Agreement.
11. NON-COMPETITION
11.1 The Employee acknowledges that the product developed by the Company is
a new concept which is to be marketed throughout the world and
consequently, the Employee agrees that at all times during the terms
of his employment with the Company and for twelve (12) months
following the date of his ceasing to be employed by the Company, he
shall: not engage as employer, employee, principal, agent, shareholder
(other than owning shares of a publicly traded company), director,
officer, partner, consultant, lender, investor or otherwise, directly
or indirectly, in activities which directly compete with LMS operation
which includes the incorporation of unique and specific LMS technology
(e.g., labour progress module, patterns, ANNi, etc.) into those
products and in countries where the Company had clients or prospective
clients at the time of termination of employment.
11.2 The Employee agrees that if he works on CIS products of any rival
company, his assignment on CIS products will in no situations be in
conflict with paragraph 11.1 (e.g., "his assignments" will not
incorporate any unique and specific technology that will compete
directly with LMS).
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12. NON-SOLICITATION
12.1 The Employee agrees that, for a period of twelve (12) months from the
date of termination of his employment, he shall not, directly or
indirectly accept as a customer or solicit for purposes of competition
with the Company, any person who is a customer or prospective customer
of the Company at the date of termination of his employment or induce
or attempt to induce any such person to cease doing business with the
Company or to take his business elsewhere.
12.2 Furthermore, the Employee agrees that he shall not, for the same
period as mentioned in paragraph 12.1, hire or recruit any employee
working for LMS at any time during the last two (2) month period
preceding the date of termination of his employment, or encourage any
such employee to leave the Company.
13. GENERAL
13.1 PRIOR AGREEMENTS
This Agreement sets out the entire agreement and understanding of the
parties and is in substitution for any previous contracts of
employment or for services between the Company and the Employee.
13.2 GOVERNING LAW AND INTERPRETATION
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Province of Quebec.
This Agreement shall be interpreted with all necessary changes in
gender and in number as the context may require and be binding upon
the respective successors and assignee of the parties hereto.
13.3 SEVERABILITY OF THE TERMS OF THE CONTRACT
Each paragraph of this Agreement shall be and remain separate and
independent of and severable from all and any other paragraph herein
except as otherwise indicated by the content of the Agreement. A
decision or declaration or an agreement between the Employee and the
Company that one or more paragraph(s) are null and void shall have no
effect on the remaining paragraphs of this Agreement.
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13.4. LANGUAGE OF AGREEMENT
The parties hereby agree that this Agreement and all notices in
connection therewith be drafted in the English language. Les parties
conviennent par la presente que cette convention et tous avis s'y
rattachant soient rediges en anglais.
AND THE PARTIES HAVE SIGNED:
LMS MEDICAL SYSTEMS LIMITED
per: "Xxxxx Xxxx"
-------------------------
Xxxxx Xxxx, President and
Chief Executive Officer
CALM MEDICAL SYSTEMS LIMITED
per: "Xxxxx Xxxx"
-------------------------
Xxxxx Xxxx, President and
Chief Executive Officer
"Xxxxxxx Xxxxxxx Xxxxx"
------------------------------
Xxxxxxx Xxxxxxx Xxxxx
